Utility wants more for delivery

Friday

Regulators are expected to rule next week on an Ameren Corp. appeal that could add higher delivery charges to electric bills already rising because of the end of a rate freeze.

Regulators are expected to rule next week on an Ameren Corp. appeal that could add higher delivery charges to electric bills already rising because of the end of a rate freeze.

The appeal was filed after members of the Illinois Commerce Commission in November approved $148 million of a $200 million rate increase sought by the company to cover delivery costs.

Ameren is asking the commission to reconsider. Approximately 1.1 million customers of AmerenCIPS, AmerenIP and AmerenCILCO in Illinois are affected by the case, which is scheduled for a Wednesday hearing.

Chairman, president and CEO Gary Rainwater told a conference call of industry analysts Friday that Ameren distribution companies in the state are earning only about half of the rate of return allowed.

He also said the utility has continued to face rising costs for delivery of power and system maintenance.

"It will certainly affect the timing of future rate increase requests to cover increased costs and to allow the companies to earn a reasonable rate of return," Rainwater said of the appeal.

Delivery rates cover the cost of power distribution and are unrelated to higher rates that resulted from end of a 10-year rate freeze on Jan. 1. The freeze was set by a 1997 law intended to encourage competition and consumer choice, though only the largest commercial customers are now able to choose among power suppliers.

ICC spokesman Brian Sterling said commissioners expect to make a decision on the Ameren delivery rate request Wednesday, although it could come later in the week. Ameren also has the option of appealing in court if commissioners ultimately reject the company's request for the full $200 million increase.

Rainwater spoke to analysts a day after the company reported a nearly 76 percent increase in profits to $123 million in the first three months of 2007, partly as a result of rates that doubled or tripled after the end of the freeze.

He repeated the company's desire to find a compromise that would ease the burden on residential and small-business customers hardest hit by higher power bills, but warned again of a court challenge if legislators roll back rates and restore the freeze.

"We are hopeful we do not get to this point, but we stand ready to protect our interests. We understand many of our customers are experiencing financial hardship. We are convinced the solution is not rate-rollback legislation, but a compromise that will provide immediate relief to those customers most in need," he said.

Ameren and ComEd executives have pointed out the 1997 law included $1 billion worth of rate cuts for consumers, and the wholesale rates that took effect Jan. 1 simply reflect the increase in power costs in the past decade.

Rainwater said discussions continue with legislative leaders for a rate-relief plan, adding that he is confident a court challenge to any rate rollback would succeed.

Tim Landis can be reached at 788-1536 or tim.landis@sj-r.com.

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